Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades
Sushil Bikhchandani, David Hirshleifer, and Ivo Welch
Journal of Economic Perspectives, 1998
Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is mass behavior prone to error and fads? The authors argue that the theory of observational learning, and particularly of informational cascades, has much to offer economics, business strategy, political science, and the study of criminal behavior.